Karnataka High Court
The Commissioner vs M/S Abb Limited on 23 March, 2011
Bench: N.Kumar, Ravi Malimath
ANfi: ..
IN THE HIGH COURT OF KARNAVTAK-A
DATED THIS THE 233% 3.§AY' OE ':v:ARCa:»ei'7:»;;ie:;_1'
PRE:3E',NT ' '- '
TI-IE HoN'BL§;
THE HON'BLE 1\II}i;J_U€;3TI§';Z§i MALIMATH
CEANC) _1v2"1"_ 'Cf? ::Q"O§éfj_~. 4'
M
K)
In (LEA N<;[121.»:_CxF A: *
BETw13EN:..eAA:"j;' '
The COn1n'1issi0ne1f":;efA
Central Excise &v.SLT.L;-- ' __
Large Taxpayer. Uniu " V
J.S.S; --TowerIs,.., ' " *
Barxzifihaiakari 11"i»Stage,
. V. - 10"G*-- Ft}-.Ring.. Road,
~ Banga1.Qre:T~.€$'Gv Q85
. . APPELLANT
__ _ {By Sri.N.R,Bhaskan
V. . St§.1liOY Centrai Government Standing Counsel)
V. Mfasgee Limited,
' -.C3E~D{E§ Makarpura, P52 Maneja,
... RESPONDENT
A'%;fad0dar~39G Q13 {By SrieG.Shivadas, Sriflarish & Sri.P.M.Prabh.akar, Advocates) This CEA filed L1/s 35G of the Central _1 .. praying to decide the Substantiai rrquestign Qf'-raw" s__tate':i therein, set aside the CESTAT, South Zqne Beneh;.__Ba;nga1g>_re' in Misc. Order NO276/2009 dateé 18/G5/2{)09.: {Corrimdn Order 276-282/2009} in Appeal N®,S"£7/336,l§é0Q"?,' in fi1€.".V interest ofjustiee and equity] .
In CEA N0. 141 or 2009;;~...«_ BETWEEN: 1' 'A The C0mmissic»ne'r.__0f _ ~ Central Excise" &TS.;'f.. =i A V Large TaXp_aye:'.'Unit;; ' ' .
J.S.S. Towers; » é Banasharnka"r: IiI'$t._age--r_ " V' i' 100 Ft. Ring'Rr'oad,:"; ' _ BangaiQre--.~58O VCESE. _ ' = ' ' .. ' - . . , APPELLANT ~ L' .R.Bhaskar, Senior. Cventraliflovernment Standing Counsel} ' ~De_s§"gner Ltd., ' Pint N93'-._&" S;'e~2¥?.'3 Phase, Peertya Iridfnstirial Area.
ea:.+;gaio;--<;»_5je0 O58 RESPONDENT ' V (By SrirB.N,Gt1ruraj, Advocate) _ , * = This em fried ms 35:} 0f the Central Exeiae Act, 1944 " _pr_a3,_fi.ng to decide the substantial question of law stated ttierein, set aside the CEZSTAT, South Zane Bench, Bangalore % ii»./"
in final order N<:>.1311/2009 dated 28/}.()/2(}Q9..,....;::'rj:
N0.E/641/200?, produced at Anne:x:ure~A., in_--'":heAA'e--n:<iS justice and equity.
In CEA N0.14O OF 2009:
BETWEEN:
T he Commissioner of V Central Excise <3: Service Tax, ' Large Taxpayer Unit, J.S.S. Towers, V A Banashankari H1 Stage,w._ _ L 100 Ft. Fang Read, A Banga1ore~560 O85 _ ' --. A ' QAPPELLANT _ geysri,N.R.Bh_asI«ia;:-;' Senger C..ef1-t1'a_1 Gavernn1e_nt._Ste.nding Counsel) AND:
M / s T'Qy0t_:--3.-- Kifi€»sk"éL'1'. __Ie'vt-'. Ltd, No.1, Biriadi Industrial' Ramanaga raeTah1--k,"y ' . " ' Bangalore R1e1ra1 VD'1v._st1*i-et ' . . . RESPONDENT ' LA (BS/Sr£.;.K.«S.Ravishankar, Advocate) ' " C.F)A..filed u/5 35G of the Central Excise Act, 1944 praying "in decide the substantial question of iaw stated éjheireine seij-aside the CESTAZII South Zane Bench? Bangalore in inai; Oxfkier NO746/2009 (Common Order Nos.741 to 747/i'?,OO9} dated 28/05/2009, in Appeal NOE/0?/2008, nredueed; at Annexure 'A', in the end ofjustiee and equity; In CEA NO. 139 OF 2009:
BETWEEN:
The Commissioner of Central Excise 8: Service T ax, Large Taxpayer Unit, J .S.S. Towers,' Banashankari HI Stage, 100 Ft. Ring Read, Bangalore-560 O85 .V..;rv:}*'ri>:::,r.L5;\If§:
(By Sri.N.R.l3'h;asl§ar, C" C ;
Senior Central V<3-Qvernnierrtefitarsding Ceunssell AND:
NO. l, Bidadi l1'1di;.§l,rial:=Area;"'V Rarnanagara'l7alt:k._--.'_ * ' M / 8. Toyota Kirleskar l'alé>ior:ll?xrt'. .. V' 2 l Bangalore RESPONDENT """ * T. .S;RavisnanKar, Advocate] This CEA filedu"/. of the Central Excise Act, 1944 praying «in decide "fhe, 'substantial question of law stated therein, set'--«asid,e t-l_1e'CES"'l'AT, South Zone Bench, Bangalore in Fgnal Order' NQ745/2009 {Common Order N0s.74l to 747 dated' v.fZ8;"O5/2009, in Appeal NOE/O5/2008, " prciiiue'eCl atfinnexure 'A', in the end ofjustiee and equity.
in Cam 'N{:}L'r'1_3;s§0r 2009:
The Cornrnissioner of Cerrsral Excise 5: Service 'Zax, Large Taxpayer Unit, J.S.S. "fewers, Banashankari Iii Stage, 100 Ft. Ring Road, Bangalore~56O O85 . b {BySri.N.R.Bliaskar,l 1, " V Senior Central Government Efitanding ».
AND:
M / s. Toyota Kirloskar Motor No.1, Bidadi lndustrial.<'z'%.rea. * Raxnanagara Taluk, " ' -- V "
Bangalore Rural District' ll ll lf.*.RESPONDENT (BE «Sri. K. Ravisitankar, Aclzvocate) This;~C'IE.A__filred--_ --3_5C_: of the Central Excise Act, 1944 praying to _Vdefei§le tl:e._sufbstlantiai question of law stated therein,-- set' asideiitie C.l3€{_1'A'l";*-SoL:"th Zone Bench, Bangalore in Final Order. No.74»?/"2009 -(Common Order Nos.74l to 747/2009.)'datedf"28l/rofixtzooa; in Appeal No.ST/164/2008, produced at Annexure "A.'¢_,_"1ni*'the end of justice and equity. In ..r3i}_:A No. 10 vzgoirgi;
A The Cornniiissioner of Central Excise, Baii.galoi;e?Li--l Ciommissionerate, Queens Road, Bangalore~»560 001 APPELLANT (By Sri.N.R.Bhasl<ar, Senior Central Government Standing Counset) Er/r AND:
M/S. Kar Mohiies Limited, N().36~B & 37, Heerehalii, Industrial Area, Tumkur--572 163 2 (By Sri.Swamy Associates, Ad%.,i;eee'teS}_.' V Thié CEA filed u/s 35C«>KVQ'f"~th€ Central -Vi194h14= L' praying to decide the substaiatiai quetstionvef Lgxv stated therein, set aside the CESTAT,_HSduVthV.Z0ne Bench, Bangalore in Final Order N0s.74I71:_o 74$"?/2'G.():'~3€:ia.,ted 28/05/2009, in the interest ofjustiee and.7eqTu_ity;_' 1 ' ' . N.KUMAR J.,_.d«e1iveredi;the frjilowingzq _ I .;I_'_I_I_£L.._--G These CFAS C V(:~n~, véheatring this day, Thisjv Vreirenue challenging the order passeti by of the tribunal holding that the servicesi" availgfi' manufacturer for outward tranisportatienrtAofefinati products from the place of removal g,h'g«1,i}d3..,'1;e Vtreatedivétettiérn input service in terms of Rule 2 (1) Credit Ruies, 2004 and thereby enabling the44Vmani1i"étg:turer t0 take credit of the service tax on the V Va1ue~~0f'ssuc::h services.
2. The assessee M/s.ABB Limited, Maneja, Vadsdara is engaged in the manufacture Bf circuit breaker, ete., falling under Chapter _ V' Excise Tariff Act, 1985, The ashsessee haV:i;ng_VClentrai Excise Registration No.AAAeA3s34e>__<:MQe7. 'lfi:e"asselsseevg's~_VV availing the cenvat credit as per, 'the prov--:'sion,s.'_:0fl"i;heCenvat V Credit Rules, 2004. arei'aisa.:'pa§>ing on the service to transport gelodsl of inward transportation Well They have obtained Service Regi.g};1ea,ii'§fii~'I§Ia,..:xAAcA3s34esro13 for the san'ie;~ aifaiiirigeenvat credit for the service tax 'fer 'ihe':l:eiitVai4ard_:Itransportation of finished goods. The autherities the assessee was paying the service tax on iriward'transportation of raw materials as well . _QutWar'd,_"transportation of finished goods and availing lsreclit V'en'."_"t.he;;.service tax paid on freight atnotint towards outward' transportation. Therefore, a letter was issued by the Range Officer to the assessee calling for information in ireispeet at such credit availed by them. The infcsrrnatien was 3%;/,, furnished by the assessee. The authorities _.ii}ere..'_'e.f _ opinion that the assessee is not entitled to a.'::ai.l..:'theeredit of .. service tax paid on outward transportation iinishledgoedsl as the same does not qualifyptoébe aninput serviee in terms of Cenvat Credit Rules, 2004;'««%fh€13ifore,-l. called upon to Show Cause th_el.lleerl§Z§itl..lCredit llarnounting to Rs.33,55,306/~ of service - of education cess totaling, the period from Novernbeng wrongly availed by them cn~~theA'igservilcesll the service tax paid on outward the place of removal, should not be recovered fr.orn"'t.he1n" under Rule 14 of the Cenvat Credit Rules' r€_:ad--":With Section 11A of the Central EX_eis.e:Act3 l§l4il.wi_th interest and penalty. The assessee ~fil'edV its'«.reply__ justifying the credit availed and utilised. Howievelr', u_"1fe_je*:;:ting the contention of the assessee, an order in lloriginal'can1e to be passed on 04.05.2007 confirming the h de:rnand' was well as the interest and penalty. Aggrieved by said order, the assessee preferred an appeal to the E gb/, Commissioner of Central Excise and Service {Ap"pe'ai»s_)_;e T he first Appellate Authority upheidtli-e. order it authority and dismissed the appeal", the assessee preferred an lapapeal :5 The"
tribunal while Considering the..xgq;.p1ieati0nd'for stay of the operation of the that the issue involved in the Case of M/slndia arid issue had been referred order dated 13,08,200? in they referred this appeal also to the llarger how the larger bench of the tribuiialA considered this appeal. «_ Vv After' h__e__aring both the parties and taking into ' eon.sid--eration'*the Various judgments rendered by the High CAo.u.rts Vasweiivas the Tribunals and also the Supreme Court and tairiiigdllinto consideration the guidelines issued by the €J:*ganisation for Economic Co-operation and Development aln'd'Athe Circular issued by the Board, the Tribunal held that /' -10- the definition of 'input service' has to be inte:rpte€:e€l: M Eight of the requirements of business and it cannot feast restrietively so as to confine the san1e._as a service ..reo_'eiyed.. only upto the factory or uplto.V__'ti:xe depot ofVVAn2anui'aeiturers.l'iV The services availed 'by at.-----.tn'anufaCturer* -_for.:§ outward transportation of final place of removal should be treated as of Rule 2 (1)
(ii) of the the manufacturer is paid on the value of such -services also. It is this order of the largleizheneh';Whichipehallenged in this appeal.
4. The Vlearn.ed'A*dditional Solicitor General of India, as_.§sailing the llinipugned order contended that though the ' elXp.res.sion'«'ipll'aee of removal' has not been defined in Cenvat H in terms of sub-rule it) of Rule 2 of the said rulesfif any words or expressions are used in the n Cenvattlredit Rules, 2004 and are not defined therein, but "gare~defined in the Central Exeise Aet, 1994 or the Finance 9013/11 Act, 1944, they shah have the same meaning for th.ef_Cen.\;%at Credit Ruies as assigned to them in those_.§VActs.1_'v:-----::
expression "place of removal" is defined under...S~ectior1.A4 of the Central Excise Act, 1944 (for short:herefnafter*referred:.to as the 'Act? meaning a factory or anyother p1a~c"e'or prer_nises_'° of production or naanufactnrern' of hgoods, a warehouse or any other_ ;;vre:nis§§r3W}§Lerein the excisable goods have deposited without payment of depot; prern5.ses.V"ofhaffconsignment agent or any other where the excisabie goods:.t;r;r§s~ 'theh*"c1earance from the factory, from Jrdernoved. Therefore, it is clear that once'tthevvmanufactured product is removed from the factcgryv for a Warehouse or a depot or premises of a ' consignnzentfiihe expenditure incurred for transporting the "goods place, tit} the goods are delivered to the customer cannot be taken into consideration for the purpose ofavaifing cenvat credit. Therefore, he contends that in the of the aforesaid provisions, the finding recorded by the EV _12i larger bench of the tribunal that the servicessxretile-i*lp:'*-l:§3f"vat » manufacturer for outward transportation lp'rotiuei;s""
from the place of removal should, alit:"einp:;;it service, is contrary to the aforesaid staltutoryiiprofisionsl and_V> therefore, the same is liable to he"{tuashedL" d It
5. Per contra.:*'the les;rned:'eounsel appearing for the assessee submitted eitpression 'place of removal' has /_ 3 restrictive meaning is to staid» said definition is to be Act for the purpose of Valuation for purposes of charging of duty of excise.'w..l{ulle' 2 makes it clear. The definition contained in t;he*sai<:l' Rules have the meaning assigned to l = thvern in*t.he..said unless the context otherwise requires.
" though the phrase "place of removal" is the Act, as it is expressly stated in suh~ Section_A'E3) of Section 4, the said definition is only for the purpose of the said section and not for the purpose of the is l13l Act. While interpreting the ward 'place of rerne?val'.;'i1':ld ' other parts of the Act, the meaning in uh' Section 4(3)(c) is not applicable. it definition, when the said word lS._jL1S€dA'}Zf1 the e:<_>nte_-'xt...Qf ether-. V L' provisions of the Act, it be given Vt-expanded meaning. Therefore, a interpreptatinn of definition of "input service? wouldall expenditure incurred by an integral part of the transportation of the goodsflvddthelfi g1;.""é;§i~v:ce tax paid on such expenditure entitled to the cenvat Credit.
6. the light' 'ef the aforesaid submissions the point that ariée-sflfor our consideration in this appeal are as V" under:
« the service tax paid on transportation from the assessee place, such as a warehouse, depot, till the manufactured it éeoeis are delivered to the Customer falls within the meaning ef 'input service' as defined under % §§ -14- the Rules and can the assessee be aélqtiieel take Cenva: credit '?
7'. In order to answer thislquesti0n'*it"is pi:ec'essai'y to notice the relevant provisions under thelCe':itVat...Credit'iVV Rules, 2004 (prior to its amendini:e'n.t'f:Qrn Central Excise Act, 1944 as well' 1994.
8. __ the p_0v{z'ef cnnterrecl by Section 87 of the C_entral lli<3X::1:i,se _:and,:'SeCti0n 94 of the Finance Act, 1994 Ce'ntral'~_C+0Vernnient have promulgated the Cenvaf._(&:feldit " defines 'input', 'input service', 'output stem/ice', -'_pe':_sl0ns liable for paying service tax', 'prn'{«!ide_f Qf ta§<:abl.e___eservice', etc., The definitions as they » steed l3:€fQI'€l:V'1".s/@2008 are as under :~ {1} defines 'input service' means any ..sle«fuiee (if used by a provider of taxable service for providing an output service, er P, {ii} 'a.j€::C°OPl(ritirl;c3'»z "
re-criiitr nent ' and quality coachirig and training,
-15"
used by the rnaniifactnrer, LUh€i'l_?;8?f:
directly or indirectly, in or in F€lait'i§?i«1ffQ the manufacture of final products: and Z"
clearance of final proclizcts place of removal, and includes se_rvices*-- used ing,v--'telation'i*. to setting up, '1€)_>df'cEfZ'I'll'Z(?iZt€)flV, 'renot3'atio'n or repairs of factory, premises of provider». ot«1.tpz,;t.serv.ice, or an oflice relating to siichl fac-tory or premises, V.acivertig:_ement; _or,"._sa;le's ' promotion, rfesearch__,« sfiorageflttp to the place
--f__of remo_i3al,' ,_ procurement of inputs, .. acti§Jiiies~,relating'"to business, such as ' auditing, financing, control, computer ne'tvt--oerZcing, credit rating, snare registry and security, inward transportation of Aiwinputs or capital goods and outward transportation up to the place of removal."
["'The word jfrorn' was substituted by the word 'iipto' made effective from 'MbNumm!»w~ _.16_ 1.42008 by notification No. to/20403;»-.t'_:'r..,_ CE{NT] dated 13,2008]. " '
9. The words 'clearance --:)'f""fi;h'a} «_p'r0CI,uets'._upte:?t1ae« place of remove? appearing in Clause (if) was S1.1bs1;i't.uted~..f61*._ the words 'clearance of fine.i--v.,_jpi<Qduetsv._fro:t1"t_:t1;ieWf31a'ee of"
removal' with effect fmm anti 'earlier to the substitutionit read as tintlierzty u V ' ''é_§Zea:i.'r1ar;eeV:Qf firial prod'u'Ct3---from the place of re;39nov_.al'f.'w" 4' t' a u V t
10. l ._ Rule dvetfi1aee...'oatput service' as unden- .."O'utpy:_t means [any taxable "service, the taxable service referred to V {xxp} of clause (1 05} of section 65 of j' Act, provided by the provider of taXa?jZe.e1'sVerviCe], to a customer, client, subscriber, haider or any other person, as the case may be, and the expressions 'provider' and H 'provided' shat! be construed aceordtngly;"
~£'}7_
11. Ruie 2(q] defines "person Iiabie for paying? as under:~.
"person Ziabie for paying serviCe":e.$§".. has the meaning as assigned to izf: in eIa'u,se_[d} s:,f:s:zj;w;_ 'V rule {1} of rule 2 of the ServiceA:'Te_Cv cRnZes;"1.9.94;7? "
12' Rule 2(r) defines f'pI0.i%i'de1"-»_0f taxéb-1e..sVervice" as unc1er:~ ' V ' "provider Qfv-.t.a3CClb.l€'~_ s'e'i':)iC"e5f' "include a person ;2'iCzE:r£e.for payiirzg sen;- ic*e ' 5512;;
13. """ notice Ruie 2(t) which reads as 1ind'er_ :4 ~ a, V A' words and expression used
-in the'se"r'uZes and not defined but defined Excise Act or the Finance Act shali A meanings respectively assigned to * .;Zhem in those Acts A34;-._ In Vi€V\7 of this provision (me of the expressions which falls far Gut' Cansiderafisn is, "place of removal" used E g: , i,/ ~38- in the definition of 'input service'. The words "p{ee.e of retrieval" has been defined under the Central '%a~::_ Section 4 which reads as under:
"Section 4 Valuationflof exeisa--bl.e_goéds..t__'_V A f for purposes of charging of of e}§<::'se.-5'1} Where under this Cluty.__ of chargeable on ang excisabilegoacls uiilth. lfeifereinee to their value, thel¢2Apn fejngoijaléof thellgbods, such value shall-- H 'A by V _ _.
{a}_:l" in are sold assessee?"f?)f"'delivery at the the removal, the """ " aucl"the buyer of the geods and the price is the l coasliderationfor the sale, be the it V _ lrrahsaction value;
(b) A' «.in__a.:»1y other case, including the case A where the goods are not sold, be the value determined in such manner as J may be prescribed.
. h 4' [Explanations For the remaual of doubts, it hereby declared that the price-cum-duty of the exeisable goeds sold bg the assessee shall be the ;
gl //l -19- price oetuolly paid to him for the goods sold and"-.._» the money value of the additional consideration;iii':_l"= any, flowing directly or indirectly from the;'_l5il_gle;f- to the assessee in connection with thel"s.(1le::_lo»f' such goods, and such pTlC€fCilfTl*d.ulgl, e_x:cllu:ilingv..:', sales tax and other taxes, eictiiallgi 55' shall be deemed to include the on 3 the such goods. I (2) The pipoislons' " ' section shall not apply in respeot e;>'c'i:i.'sofI:>_Z.e--'--~ goods for which §t;r'(1_riff ulilue under sub-- seCti__on . ' ' ' ' iv
- _ Age}. th.e'pluIpo"se-- this section,~ ' nieans the person who is l the duty of excise under it V _ and includes his agent;
{bi «._Z?e_z;sons shall be deemed to be A "related" if-
{i} they are lfi§€F'*COFU"i€Cl€d undertakings;
{ii} they are relatives;
{iii} amongst them the buyer is at relative and oi distributor of the
(iv) eggs assessee, or C: sub-clistriIoutor"~.._ of such ciistrtbutor; or they are so assoctateetltt"thatff ;. they have interest, _citre'.:.tly tor indirectly, V-tn" the b_4ust_nesc'4_ each otherf} Explanation -1 n this clause "
(1') "inter-connected Vunderfakihgs shall grhave V'_ the l' 'rneasling "-- ossignect' to "it: -in ' clause (g) o f r'.
_se"(':ti,on'V__4 4 Of. 1 ..Monopolies andV't.ResVthve_tt1ge"Ttade Practices _ ,,:*tg;Lge69g54qf1969kand V:gau"' shall have the _"n1'ea,ntng assigned to it in h ) of section 2 of the [ii {iii fifompantes Act, 1956 (1 of l956fl {C} 'V"pEace of removal" means -- a factory or any other place or premises of production or manufacture of the exctsable goods;
a warehouse or any other place or premises wherein the B. it/«
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exetsabie goods have beer."--.._ permttteci to be without [payment of dutggj' « ;_. A' {iii} a depot, premtseg_""-._.3.f' <:onsignmerzt"'*agert_t other place' ozfpraeniisee _f-"ourr{*--..« 11"
where the eécbisable are to be é'ola=.after t4h.eir'aefeafanee from thefaetory; t b from where"'sz;ch goosgis are' -removed; [{cC}",e_"tfime§of §rernoz.2ai"',j'~.th ifespect of the googi's--...re:noi>edfrom the place of ~V.re'm::S;_;al 't"efefred to in; sub~elause (iii) of 'A be (teerned to be the time at are cleared from the fG,etoi'y,:} " .
{Ci} 'V"'t'i"ahsactton value" means the price actually paid or payabie for the goods, when sold, and tnciucies in addition to the amount charged as price, any amount that the buyer is {table to pay to. or on behalf of, the assesseeo by reason ofl or in E ~22"
connection with the sale, :"
payabte at the time of the..sateVv.Qf'-at ._ any other ttimefltthctudifzg limited to, any 'Tana/9édt.,f or to make"Vp':*auisia72.. fi:)F'.V or publicity, :I_ta'rlc_etiny r setting orgat;ttzxati0n""' 'eécfpehses, « 'Vstafage, _y servicing, _ warranty, fV.cOmmtse'ioh' any other :: bait V» include the _ excise, sales tax
5).; and .,_dt!1_:e:A' any, actually paid . payable on such goods. ]"
15,_{' 'V the opening words of sub--section (3) 'V " reads uhdyerz ht 'ifhif the purpose of this Section". E 'therefore though the expressien "place ef isfhdefined under Section 4(3) of the Central Excise . Act, 1944, its application is to be eenfined as is clear from <Ww egg, the opening words of subsection (3) for the Seetionzilenly. . vb . A
17. Rule 3 of the CenVat VCre:§ii:..V Rules- Cenvat Credit. It reads as under: A. "RULE 3.
manLg'acturer_or finol' or a provider of;:_§d;\rabITe Ishglll be oliowed to take credit 'ffgefeirvzaufier to as the cE1WAr.1¢red;i)"'of--:l'; ' _ V " "
{i)_ Z: :'315¢'e"g"ied in the First 'l'ud:fijf'Act, Zeviable uner """ 1' "V at; h' ' " .__(i ii)e x' * 'V % ¢;~§z~ V -Ii}: input or capital goods received in . {He factory or manufacture of final product or 1 premises of the provider of output service on or after the 20"? day of September 2004 ineiuding the saici duties, or tax, or eess paid an any 3% /' 'v _24,~ input or input service, as the case may be;--.._» used in the rnanttfaeture of products, by a job-worker awaiting the oj'eXerTE0§ton speafted in the notifiea_ttan_Qf:the' h Government of India in the"Ministrj4 of [Department of Revenue), Excise, dated the 253'?4_Marehbfv I986, 3 in Gazette of India D'td:e"n.untbei'_C§;S dated the 251}?.Mareh;----;t§§86;and reeeitzed by the manufaet*u.rer_fa_r ttse "tn.: relation to, the manufactttre"t' or after I 091.. d'-:ty':o f Septe.rr:1:>er<,_ h "received by the t':*nafj;afatitu'rer--.»t;f ftntgtt 'product or by the '.pI'avitZe}=..qf gtttpttt..ser'vices on or after the 10?"
h' day afSe;§ter_riber' 2 Expttanatione For the rernouat of doubts it is eiartfied that the manufacturer of the final gwraduets and the provider Qf output service 'V t atlowed CENVAT credit of ddditienai . 'ditty teuiable under section 3 of the Custorns hi' Tariff/Act on goods falling under heading 9802 of the First Scheduie te the Customs TartffAct. .25» i8. A reading of Rule 3 makes it manufacturer or producer of final products~o:i..g'{"~pro\/tidter oik taxable service shall be allowed to=__tal:eet§redi,t.:of"th'e»v cesses or taxes paid under any: one offthose head.S'x. mentioned therein, provided itie. onVa.ny'=i:iiputviorflcapital goods received in the of finai product or premises of tl;i.e_ service and any input S€I§'X.fl(T:fV3:JI:'€C€:i:;\:/"E?C1::t of products final product output service including the on any input or input S€1'ViQé'=_"a_$ 'used in the manufacture of interniedixatehhproductsgf job--worker availing the benefit of exeiiiptionpvspeeifiedmin the notification and received by the ' ifnanufaetu*r.er>for use in, or in relation to, the manufacture of «productorivttor after 10"' day of September, 2004. V. . :f.i'herefore, Cenvat credit includes the duty, cess or paid under the aforesaid various heading on any i.np'ut, eapital goods or input service by a rnanufaeturer, A26- producer or provider of output service. Therefore it iejha"-,pool of duty paid under various heads enumerated Ieaid;. rule. The aforesaid Cenvat credit may he uti1_il2te<:ji*.fo1' the V' payment of any duty of excise on"any"final amount equal to Cenvat credit ta1<__en_Von inputet xii inputs are removed as such or--v.1_f'peartially_ he1i1g:fn'o4ee'SSled or"
an amount equal to Cert}/at oreCltt_'t--al{'ein on Capital goods, if such capital goods are remoVed.Vaa»'sLieh_ or 'service tax on any output service. i l
20. 1 __In--i:_e§g:erei'se pvowereeonferred by Section 37 of thegtlentrallixeilae Aet;..l_'l944..vlthe Central Government has also marle" the ~~,,l§Xeise Valuation (Determination of Price of Exeisable...Goo.de}':Rules, 2000. Rule 2((:) of the said * Valtiatimn 'Rulesnldefines the word value as referred to in Aot. Similarly Rule 2{d} makes it clear that words anldi, expressions used in the said rules and not <:lefine«;lA':.':)ut defined in the Act shall have the meanings reepectively assigned to them in the Act. _27c 2}.
SITE?
also relevant which read as undeij; _ "Rule 3. The value of: - A " T .' goods shall, for the purposes ofrciaase (bfcf V " i' section (1) of section 4 Voj7__ti'ie Act; be in accordance with theseftiles. ih Rule 4. "firing ua§.z§/;'e.__t:;,rfi"*:!1e excisable goods shall be basedon 'tf1e?oalz:_te Vtsigsch goods sold bythe .asse§'sVsVe'e;at'any other time nearesit'h'to of trletnovai of goods under' tfinecessary, to such account «ofthe difference in the dates such goods and of the ekcisablet assessment, as may V _ papet "reason'abie. :
Ruiz: 5. V Where any excisable goods ate sold in the circumstances specified in clause V T. s2.tt9'%fsection (E) of Section 4 of the Act except ' the'«~.?§é§'c'r;iVr9'rrstances in which the excisable goods ate 'sold for delivery at a place other than the it piace of removal, then the value of such excisable goods shalt be deemed to be the transaction oaiue, exciading the cost of § 3 %/ Rules 3, 4 and 5 of the va1uau:onjt2ui§s.,v?*si'2--ot;ss' ,_ >44 transportation from the place of removal up to>'~.._» the place of delivery of such exctsable goods." .._' _ Exp1anation.1 to the said rule defines K V' transportation'. It reads as under:;"
"Explanation I. ."co/st of :'t;:ansportattor':" ll "
includes ----~ V "V AV _ V V'
(t) the actual of transportatton;
(ii) in case 'averaged, é . i V' the eoétv' tranéportaaoflll calculated in . 'Vtv'i'ijh generally an ' 1; V. ,ofineiples "of CO8 ting. "
VEXp.1anatio'reetdos" ' under:
'For removal of doubts, it is fianfied. that the cost of transportation from the jfaetozy to the'"p'lace of removal, where the factory V' " ? place of removal, shall not be excluded ._ jot3"_the'.Loa}"poses of determining the value of the exefsétble goods.
._ E ;E/
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22. From the aforesaid rules it is elear'.1§hat"»ih'e: _ of transportation from ihe place of removal l.1p~»li4t;:',§:"ll'l€'~:l:3lElC€ of .e delivery of such exeisable goods shall value of such excisable goods; .
23, The question is_°'~V..}ipto." _what:lg_ '°after'-L' manufacturing of the Whether' "service" rendered in transporting'; from the place of removal up tgrlho gzacg "input service" lireiilit Rules 2004,
24. __ -- 'arose for consideration in the case of Limited vs. Commissioner of Cen§irair.Excise,.iliueihiona reported in 2007 (6) STR {Tri.-Del) beelfore TCE':iSTATl,Wl5ri1ieipal Bench, New Delhi, It held as i3..¥1Clerr:..;'-«is " l V '*1 4. The interpretation "V leonvossed by the appellant is also Contrary to the rule on the subject:
contained in the judgment of Honfible :/ / ciri "in ._rnanv;iacture, tggi Supreme Court in the Reserve Bank case. A statute is to be read as a whole and words used interpreted taking i_n"t€)"--' L" 3 account the context in which they'"aref°'» L. used. Definitions are tob'e'iooke_d at V a whole. Clauses of a ciefirttticzn are 'not to be read disjunctively. in the . case, the statute cieciis ivith*-- a on manufacture.' Thgi...dé;"§.niigQn gs "g-mgheri context of A riegvardrv.toVciuty/tax paid V on inpavt sale traniégao-rt goocts is not . . The two clauses in the7.definitic§n take care to "circarr2s:cnbe"input crédii by stating that '' 4servicefvsediin»reiation to the clearance from V'the;vZacae. of removal and service for outasard transportation up to the ptace"vf removal are to be treated as Vinpu_t service. The first clause does not .___merition transport service in particuiar. ' ffhe second céause restricts transport service credit up to the place of removal. When these ttvo ciauses are react together, it becomes clear that transport E 'r;/ service credit cannot go beyond transport up to the ptctee of removat. . The two clauses, one deaiing generai provision and another with at specific item, a:e}'u::« to be ' A dtsjurtctioely as to brirtg o;}§ou:
and to defeat the teftws se_Pte'me_ purpose of tnterfifettttion to .__:'o~ harmony and reco7'tC£ltettioi 2. _ amottg ' -th V' various proo'tston,s}.'5 }
25. not accept the argumentsi. of service used by the ttttettttevlyearance of final products from ~»te.~*'e1igib1e for input service Credit. TheVC_Qnte1fl1"t:o_f1that 'i.he""transportation of goods from the 4, place ef,remoVa1 to""t'he buyefs premises remains covered by _ the" "clearance from the place of rernovai and thus ereolit is efjieeffieally provided for in respect of service tax paid on tr:~3ne;port to buyerst did not find favour. However, after saié judgment, the Central Board of Excise and : , 1%/t ":32- Customs, New Delhi issued 21 Master Circular ee'fti'f3z:j:1g_"t1i3e"«A pmcefiurai issues relating te service ta>:~-Viéeie "--C1rCuZeL1"*--, No.97/8/2007~S.T. dated 23.0s.2Q07._.ii ;~e'a;1é'gs{und§f£g T T "8. CENVAT Credit: _ tb) .... ,. _' _' V 2 "(c) Issue: ' tot: «} stage a manufacturer/consigner heart' take&"Cijet3lit on the service ;taX"paid an géaods ti'an's'p0r_t.by road? «'CCnUne.1f<:tS'. has been examined in great in the case of M / s.
U. CCE, Ludhiana 2200?' (5) In this case, CESTAT has? rnade observations:
. x"theVVpo1stis'a£e transport of manufactured V gaqcts "" "not an input for the .¢__V'mznafacturer/Consignor. The two clauses definition of 'input services' take C(I?'€ ' *tQnfeiteuntscribe input Credit by stating that _ service used in relation to the clearance from the place of remevat and service used for outward transpartation upte the piace cf
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removal are to be treated as input service. The first clause does not mention tlransporift V"
service in particular. The second claLflse'~ " ' restricts transport service credit L. place of removal. When these-tioo5_'cla.usevs_ are read together, it becomes A.Clear_ transport service credit cannotgo . transport upto the rerrio.l,l=al.l two clauses, the onei-dealin'g'~.._ioith provision and 'other specific item, are not to__l;_2ve so as to about CQT'!,:f.Z'iCl~..Vt'd~.l' the laws' pitrpose --of:finter'pretation is to find among the it H " V _ l' case of M/s. Ultratech Cementsv L':c_i"[u.»-- Bhavnagar « 2007 (6) = §_.j1_;_z33e4 mi} 9 rzoo7~ToIL-429--cEsTAT»AHM, it 'held thciiiafter the final products are cleared fro'z~n"the place of removal, there will be no scope « «V:Q$'.o.,%.;v;{§b:§:eq'aent use of service to be treated as inpilt.) The above observations and views explain "the scope of the relevant provisions clearly, it correctly and in accordance with the legal '' provisions. In conclusion, a e34, manufacture/cansignor can take credit <;r:--- _ A' service tax paid an Outward transport of g'aads:up" 'A to the place of removal and no,t»beyonC§ thatf »
26. Acting on the circzularizin I ap'pe2$l Gujarat Ambuja Cements, the Put1ja,lj--.. Court, held as under: V. 'V "9. It well 'that the circulars issued by the aims at adoption of unifqrni that regard reliance. h'as'_'beea .or;1' the judgment of Her'i'l)le Court in case of Paper Products:-. {_sup'ra)~-- such circulars are Placing reliance on earl'ier " Supreme Court in the cases of 'Martin Industries, 1997 (94) '(s'.c.}" ='' (1997) 7 sec 47; Ranadey l';g1'icrc1riutrie"nts"':9;V CCE, I996 [87] 29 (sex = V a_99§;;>,l"1V0_scc 387; CCE U. Jayant Dalal [P] Ltd., 638 zsc.) = (1997) 10 sec 402 and _ Kores {India} Ltd, 1997 (89) E...L;I;44z *~ = {I 997} I0 SCC 338, Honljte the Supreme At 'T Court concluded in para 5 as under:
,,w«m.v»« -35- "5. It is ciear from the abovesaid pronouncement of this Court that, apa.rt..j_».:'_'i-"i* from the fact that the Circulars issued'-hay it the Board are binding on _the Depa:r'tttien:t_,':v.
the Department is [2feCZi.tdefti from it challenging the Corijectness the ' Circulars even on the.ig"m_und £:jf_the being inconsistent iv_ith_ the s.tati_itory:? provision. {atioi of jiiclgmenthiojhi"
this Court further' A of the Dephartmefnht "to . ap1veaxlVV*'against the c::,fhthe..'VE%intting""nature of it iclear that so " the 'Depatttnient is concerned, iv'i1atevefr.i has to take, the same '' ..i_,v4iU, 'ficonsistent with the Cit'ei_ila:divhi'e_hV'is in force at the relevant "JO. It is, thus, evident that the revenue is ' jo%'eeiude;ft~j'1*'om challenging the Correctness of the cireaitatiz even on the ground of the same being it x ineohsistent with statutory provisions. It goes fatther to limit the right of the revenue to file an appeai against the correctness of the binding \ Mum?"
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nature of the circular. Therefore, there 1- escape from the conclusion that the _ _ binding on the revenue. "
"I Z. The only question the appellant fulfills the requirerrlehts of The first requirement is thriitthe ouinership goods and the propertyetlis. to rerrtainiuith the seller of goods. till the e.ieliuery the goods in acceptable conditiohv:l'to_ the at his door step. aforesaid has to be eons§idered5§lto';'._be bevcausel the supply of cerrterzt E3I'j1:;:lfl'l€ .:ippe'lZ'unt"'to customer is 'FOR tvdesltirtjation'.u71fl'faelagajjellaritflalso bears the freight respectl to the door step of the Customer. charges incurred by it for 'such sale"a'r1d lsiqoply at the door step of the customer are""subjected to service tax which is l V' " also paid by the appellant.
' The 'input service' has been defined to rrieah any service used by the manufacturer H tltvhehther directly or indirectly and aiso includes, inter alia, services used in relation to inward transportation of inputs or exgaort goods arid
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outward transportation up to the place of removal. it has also remain uncontroverteci for transportation purposes insurance '7' also been taken by the appellant shows that the ownership 'goods property in the goods has it the setter tiil the deiiizejry of. the in acceptable condition to theuphurchasier. 'hisiijloor step. Accordingly; even; the conaiii'on" that the seller has to oéftorpdamage to the goods Aduringp ' stand i'
27. """ fiaf'ore--said judgment, the Full Benchhof inipugned order, after referring to the Varieties held that the contention of the reVe§nne'* that " '--.Vont_\yard transportation is specifically » rrientione.eiwi.Vn'*--t.he inclusive clause of the definition, Credit for H oiit.ward«transportation cannot be allowed with reference to ot'=ier'£irnb or category of the definition of input service . which general in nature, is not Correct. They further held Kth'at" the expression "activities reiating to business"
r38- admittedly covers transportation upto the CUSt0IIl€l'€sH"'fJ_l8.C€ and therefore, credit cannot be denied by l'€lf;ll'ig."Clf? "8..' specific coverage of outward transportation uptC--..Vthel_l.place' K it removal in the inclusive clause. The exlpressiori-'T_such_Vas" is purely illustrative. The expressionfirneans "for eXainpl<e"'<or'-, "of a kind that". The usage ot""'the.w*ords* 'alter the it eréplyi-ssion "activities ,i;ei,%tn4§to"~ti"ix§ii;eSs" inclusive part of the definition, their view that the defiriit:Er:i:;i:~_of would not be restricted i«O~ ':5ls)§Qllll§§\g.,\x{iLfl'§1'€VE'Ll4l;€I'. They also noted that <:ustoIner's premises is an activity It is an integral part of the businessll'ofula_ to transport and deliver the gooélslrrianufalctured. 'elf services like advertising, market and . l'€S§3aI'_Cli., v'Jlll~Ch are undertaken to attract a customer to buy H goods l{.)li7l'8';'v.I'Y1Ql1'lLl'f£lCleLlI'€3I', are eligible to credit, services which enRsiirev~..V.ohysical availability of goods to the customer, i.e. . seijvieels "for transportation should also be eligible to credit. held that the arguments oi" the revenue that the
-l/' -39- inclusive clause in specifically limiting the eredit&Vfor' transportation upto the place of removal, hasllaibearingh V' the interpretation of the Clause and therefore, t;heV"e§_<_pre1ss1o't:« "service relating to clearance frorn.__tl':e plaee. of ren-1loVaVl"._V cannot cover outward transportation x.as--..Au"1fttena'b'lel and V' ultimately, after relyingon ofathe Punjab and Haryana High Court inuflthe' /flmbuja Cements Ltd. held that.--the_ degfiiilitiglfi has to be interpreted; of business and it eannotbe read restriet.ive_1§I st-,..as7t0 confine the same only upto the factory' of manufacturers.
28. _V "Fo1loW%ng'v.this Full Bench judgment, the appeals wi1ieh:,."-werg pendii"ig'V where the said question arose for 'Corisiclerat£o'n_, "were answered in favour of the assessee and against the i.1r'e§.renue.
it Cenvat Credit Rules. 2004 are framed by the '"._C'5e'n'tral Government by Virtue of the powers eonferred on it "40- both by the Central Excise Act, 1944 and Finance Act»,:ll9_94 whereas the Determination of Value of Excisab'le.f_' Rules, 2000 are framed only under the Central-...E:§cise _ Duty or service tax is payable l}cthl_len.Vlgc01as.:_.yvhich"hare manufactured or produced and servi-ces..whichIare rende"recl'r.p or provided. Therefore it is n'ece:=sary to d'efine.°lnput and input Service. Input refe_rs only Excise duty is payable thereon, whereas to service on which service. Rules makes it clear, reaél definition of "place of rernoval";thlatrlthe;.;transpcrtat'i0n--charges upto the place of removal is 4l'talieir:liii1t0>.eh'nsinerati0n for valuation for levying excise d1ity_,atl1ns the transportation charges from thveiplace cf ren'i<3val_pto the place of delivery. Input service ' per, VS8._iS.yfiQ'f"vQ0I1flI1€d to prernanufacturing stage. it also 'rei'er's to 7p0s'tVVmanufactnring stage. As is clear from the Circular. issued by the Board on 23.08.2007i where a 'rn a__nufa'eture/consignor may claim that the sale has taken 'place at the destination point; because in terms of sale E \/
-4}-
contract/agreement {:1} the ownership of goods Vail1dl';the property in the goods remained with the sellerof till the delivery of the goods in aceeptable_.0.orlditiorl' to ., purchaser at his door step (ii) the seller' of or damage to the goods during trahsit to .desltir1'atl"or1l;'=.p and (iii) the freight charges 1n:eg;~.§1pe::-r the price of goods. In such cases;~...the servtee paid on the transportation up sale would be admissible if; claimant of such credit, that property in goods (in terms tirideréection 2 of the Central Excise1_Act,' .;§r¢::i1s of the provisions under the Sale of l Goods occurred at the said place. Therefore. lf t'h.e service tax is paid on transportation . c'harges,.i1rs'uch cases, it fell within the phrase "clearance of from the place of removal" and therefore, the asslessee entitled to CEl\NAT credit! _4g_
30. The definition of 'input service' contains' 'l;{oth"the word 'rneansf and 'includes, but not 'means and ~ The portion of the definition to which iihe"'--iJiford'v.n'i.eans"' applies has to be construed I'€S,3U'l:E:"{,lV€:iil'y.. 'it is However, the portion of the ciefinitionlto whi'c.ha..the_}word_:> includes applies has to be as it is extensive, The gi.§'_'p::l}'1A:'e.C_??1efinition of 'input service' deals with S€*.I'X/.':i.C:€. manufacturer, whether pvindirectljr; relation to the manufacttlr? ltlalso includes clearance of final lrernoval. Therefore, services received. or «manufacturer from the place of removal till it V crieaclies" its destination falls within the __of input .... service. What are the services that . norrnally. urnanufacturer would render to a customer from _oi";'rernolval'? They may be packing, loading, unload.i:ng',v "transportation, delivery, etc., Though the Word Atransportation is not specifically used in the said section in '._the"context in which the phrase 'clearance of final products 9 V i ".43- from the place of removal' is used, it includes"*.pthe transportation charges. Because, after the finaiplprodlucts has reached the place of removal, to clear the jpn$di:c:...é_ V' nothing more needs to be done, except'tran«spoi*ting_the"said final products to the ultiniate__ destination = custorner's/buyer of the said lp.r:od,uct,. apart.ifrgontattlendingll to certain ancillary s'eryicesl'"aslll_:inleia.ti0nedl"alooi/e which ensures proper (Z1€llV€I"§lJO_lV tlriei' upto the customer. rendered by the manufacturer':are*~liiil'cluel§.g1:§intlieldetinition of 'input service'. Howev_e--r,.as'~th<%1.:;;legislaturel h_as_.~l:hosen to use the word 'rneansf in of l the definition, it has to be construed strictly inliaerlrestrictive manner. After defining thejinpiut seriricef used by the manufacturer in a restrictive rnanr:eur,:iin<'the later portion of the definition, the legislature 'includes'. Therefore, the later portion of the"'--defi.nitioh has to be construed liberally. Specifically what a.re__ the services which fall Within the definition of 'input "'Q逧1Vl'C€§ has been clearly set out in that portion of the it//i
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definition. Thereafter, the words 'activities relating to business' ~--~ an ornni-bus phrase is used to e:;pan:if1.th.e meaning of the word 'input service'. However, af.ter.us.inghth'e ' omni~bus phrase, examples areggiiren. tit ,a1_s'o'._3'nciude's transportation. The words tised . are' ta) «. in_ward._ transportation of inputs or-v._fiCa_pitaiV' Vgoocipsh: (b--}m"outward'V' transportation upto the p1ace&i.of'rernoi2tai. dealing with inward transportation, used the words 'inputs' or 'cap¢i.tai.. V" with outward transportation...t1*ros'e ppoodnspiouously missing. The reason iriwardtransportation of inputs or capitaiitgoodsdv premises, if a final product emerges, "thuat _ finaiahas to be transported from the factrorjr 'prernises_d:ti1i the godown before it is removed for . being _de.1Nered to the customer. Therefore, 'input service' i_n'tol_ude's'a"_n.ot the inward transportation of inputs or eapitaiv*..;:;oovd's but also includes outward transportation of the h final product upto the place of removal. Therefore, in the %/o ,45- later portion sf the definitisn, an outer limit is preseribeldgfor outward transportation, ie", up to the place of rei'n'me'.al.___j' 5 _.__
31. T he phrase 'activities irelat_inlgjt"0_gg ornni-bus one and it finds a place in"-the inclusive ldefin'iti"0n."a The question is, by a interpretationfigi elutward transportation of the the ;§i§::':e"§;r removal till it is delivered to the construed as falling within. it is a well settled ruilel while interpreting a provisiong" of not only the express wordsllused which are not used. If the legislature explrelsslil..'iulSed the words 'in respect of the trarisp0rtati0n"'in a particular manner and did not choose to » include within. the ambit of the word 'transportation', Certain regard to the scheme of the Section the way it it is not open te the Court to include something w.h_ichl"the legislature deliberately did not include in the "'.clei}';riiti0n. if the Courts indulge in such interpretatien, it E 2 Kprogiuets is not included, it is impermissible to read those ~46"
amounts to rewriting the provision which is irnperrniissible. Yet another reason for coming to such a conclusi«o.nll"is€ first part of the restrictive definition K it products from the place of removralllisl'e};pres;sltz:_"staltedl;'M transportation of final product i*einotrai.f:is~.VV included in the phrase 'ciearaiicei-iof final the V place of removal' again~..jthe .San1et.:icarinot into the provision under the to business'.
When a the definition, it is not provisions of the very same rule "services over again, When a the first part of the definition portion of 'which refers to 'clearance of final prodtuctus from l;l1€','v_pl'E1f3€ of removal' and in the second part ifiriclusivel the definition when the phrase used is 'actiVitie'sl_"_relating to business such as', merely because in that pc--::::¢ri" of the definition either transportation charges is 2 i1ot__ included or service rendered for eiearance of final 2 M47- words as in the earlier portion of the ciefinitiong'--.._it is specifically provided for. it is a Well knoxivriljlirulecrllnf interpretation that when the statute uses words._an:iip:hraseTs in a particular section, meaning has to ohe'_4given'~ifn each 'er those sections. When the statute particular contingency, it is toso in"terprete'c:l antiafter so"
interpreting, it cannot he Selld another' 'portion where general Words are usecll,' is specifically provided. Tlluéféffillfi, 'by the CESTAT that the iactivities relating to busines.s.?_ eioveiscWtiiansportation upto the eustor'ner'*s' 'entirely unnecessary. This interpretatiori spoil" it support from the subsequent conclulct. on tneeliparti of the Central Government, which it gineilaéa. Rule 2(1)(ii). By notification No.10/2008~C.E.(N."i'.) dated the words 'clearance of final products upto theplace removal' were substituted in the place of the pl words 'Clearance of final products from the place of removal'.
"'The'lintention of the legislature is thus manifest. Tili such E
-48, amendment, the words 'Clearance froni the place of ifeznoval' included transportation charges from the place it reached the destination, namely the eustomelifiw.x'l'herefot'e; ._ the said input service was included inuthe lepafly' apart definition 2(l)(ii). Consequently, \x?e--Aeannotppl.i*.t;€%l expressly provided in the earlljrippart of "having been included in the laterfl pa§.'t'mo'.i'V' interpreting the words 'activities relat/itllg it has been amplified by ititlis Vltransportation of inputs or transportation upto the place :oi'"ferno:va1..;l: transportation upto the place the inclusive portion of the definitionlithe-seeond has to be read along with the invvaijd trai*is.p_Qrtation of input or capital goods. It has ' tiorefeijeneete t'o..'elearanCe of final products'. However, when the"~elainils"p:a1§eput forth on the basis of the said circular of j llfor benefit of CENVAT credit, even in the eases 2 where the aforesaid Conditions are not satisfied relying on lIth'e"tvords Clearance of final products from the place of ~49"
removal, the Central Government thought it fit to amendthe provision from 1.4.2008 by substituting the place of 'from', in Clause (ii) of Rule 2(1) makinglighe. clear ie. whether it is an inward :transport.ation:'of_ input capital goods or clearance of final 'the«.pla:ceVlVof._ removal, any service rendered 'andpservice tax paidwttould fall"
within the definition of' Tinput,.~'ser.i}_i'cel*1-»lA_"l'herefore; is clear that till such arnendrnent' from 1.4.2008 I notwithstanding: the 2 the Central Government' 'cii*cu1lar?V_ transportation charges incurred..byl:th_ve riianufacturer'forfelearance of final products from the included in the definition of input serVi._ce. _ the interpretation placed by the Tribfunal on the «words 'activities relating to business' as » irielud,_ing clearance of final products 'from the place of .;~eiiiova1=lgsghiohhlvlloccurred already in the first part of Rule 2(ll'{ii)) to 1.4.2008, runs counter to the language 'en1.plo§l}'ecl in the second part of the definition of 'input l".;serx'>iee' and is to that extent contrary to the legislative M59- intention and therefore, the said finding is unsustaiiiab.le"--in law.
32. ln Gujarat Arnbuja Ce:-nents7 Bench of CESTAT, New Delhi, had the transport of manufactured» notll'-aiilflliripujt in"
manufacture. The two,.-cplausesrrinl"p:the'~definition..talte care to circumscribe input credit_.'h$}*' service used in relation to thefclearancei' of removal and service used' up to the place of removal. service. The first clause does seririce in particular. The second clause relstricts credit up to the place of rem§aVal'.. two clauses are read together, it .A h'e.coines..c1eza'r that transport service credit cannot go beyond H tran;3~pVortf_~up'~to"the place of removal. The two clauses, one delalingflivith general provision and another dealing with a specifieitem, are not to be read disjunctively as to bring .ah'o'ut conflict and to defeat the laws scheme. The purpose #51"
of interpretation is to find harmony and reconciliation the various provisions'. Giving effect to the _ when the Circular was issued by theA»Board_.dat::eti the circular Came up for Consideration Haryana High Court where: wastheld ownership of the goods and lthe:lpropertyl_ the seller of the goods tilltthe acceptable Condition to the purchaser the freight charges ineu;?i"etiigfi3y such sale and supply at leibistomer are subjected to serviee'l't:§;X iltllflalisll within the definition of Larger Bench of the CESTAT followinglll'>flxie.V jludgment held the expression 'activities relatingttvo business' covers transportation upto the »eu.storners'.j'p.lace and it is an integral part of the ~:nan.ufaet;u.riiig"V business and therefore, credit Cannot be relying on a specific coverage of outward 'transportation upto the place of removal in the inclusive "'.olaose. However, the interpretation placed by us on the -52- words 'clearance of final products from the place of and the subsequent amendment by notification CE(NT] dated 1.3.2008 substitutintgwthe w"o§~"ci"::'_1,th¢°' said phrase in place of 'uptof rn_'aktes'tt'~it"
transportation charges we»re""~._jnc1u'ded . in, Hphrasevf 'clearance from the place of rernovafi upto'-the date of the said substitution _Cann{o't. tnc.1uded within the phrase 'activities relating to bus.iness°'';~.V ' ' "
33. 1 ,_'I'h_€?u1V";£'forVe.' front necessary to expand the meaning of' 'a:ctix:}ities--re1ating to business' so as to includethe"transportation"oF'the final product from the place of removal 1'_ts'd_estination. Therefore, though the ultimate order passed byuthe Larger Bench does not suffer from any . i:r:£icrnn_ty,the~-- aforesaid reason assigned by it in coming to ' the._said«o_onC1usion is erroneous.
34. " V For the reasons' which we have assigned in our "ii ord'e';_2 the finat order of the 'E'ribunat is iega} and valid. We
-53, further make it eiear that this iI1'E€FpY€tai1iOE1_:'iS'«!X}f§3'i1i§V~:. 01.04.2008, in that View of the matter, bui_'§})I'jfiF1§3V ., modification, we do not see any merit': ifi':he_se-I ap_;}e.aV1.s."'The substantial questions of law raised are éznswerefiiih ié.\roiiivioi'*..L the assesses and against the re=a:ei111e.
35. We wouldfli Vhliifieii record, our appreciation the officials of the Excise" 'i__ri_' Mr.D.P.Nagendra and Ms.Sudha Koka, Additioiial CESTAT and the learned Senior Choiihseli this judgment.
353;;
§§§§E $535"
3§.:§§E